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First Move with Julia Chatterley

Japanese PM Visits Ukraine For Talks With Zelenskyy; Yellen To Support To Depositors At Smaller U.S. Banks; Dudley: Situation Is Manageable If Fed Can Calm Things; Chinese Leader Xi Holds Second Day Of Talks With Putin; Sources: Indictment Possible As Soon As This Week; Ukrainian Singers Perform At London's Royal Opera House. Aired 9-10a ET

Aired March 21, 2023 - 09:00   ET




JULIA CHATTERLEY, CNN HOST: A warm welcome to FIRST MOVE, fantastic to have you with us for another busy show this hour where our minds are on meetings

if not necessarily on the meeting of minds first up the leaders of Russia and China beginning a second day of summit talks in Moscow.

President Xi eager too to push his 12-point proposal to address the Ukraine war largely dismissed. As you know by the West as a non-starter, the United

States suggesting this visit provides, "political cover" for the conflict, some extraordinary images there.

We will discuss the second meeting, Federal Emergency efforts to study the U.S. Regional Bank, First Republic including possible direct investments.

It shares up some 23 percent pre market up, I said after losing almost half their value on Monday. Reports say the big banks spearheaded by JP Morgan

CEO Jamie Dimon and looking at boosting First Republic's capital.

We're still in the world of banks saving each other it seems. And U.S. Officials also reportedly meeting to discuss how to ensure cash deposits

above that $250,000 level until the financial turmoil passes also if it's going to be needed. We've been asking that now for a week and what whether

that's what it's ultimately going to take to draw a line under this crisis.

We'll discuss a little bit later on the show too. For now, take a look at U.S. futures and European stocks building on Monday's gains with banks. The

outperformance Treasury Secretary Janet Yellen will also be speaking later on today to bank executives.

Her prepared statement reiterates that outflows of funds especially from these Regional Banks have slowed. The fingers crossed, that's enough, but

as you can see a strong performance particularly across Europe. And one more meeting in our sights too, the U.S. Feds decision on Wednesday, on

what to do about raising interest rates.

Most investors are now expecting a quarter point hikes. But for me, it's more a question of will they hike versus should they inflation versus

financial stability? It shouldn't be a compromise between those two things but recent events suggest otherwise. We'll discuss later this hour with the

Former President of the New York Fed Bill Dudley.

But first, the Kremlin rolling out the red carpet Russian President Vladimir Putin welcoming Chinese Leader Xi Jinping as they hold a second

day of talks in Moscow the two leaders met for four hours on Monday to referring to each other as dear friend. Nic Robertson joins us now to

discuss this.

Nic, I think we have to talk about the visuals, first and foremost. And we were just showing that long walk there in that imposing room down the red

carpet to the meeting of these two leaders. A vitally important moment, I think for President Putin to simply display President Xi in Moscow and the

projection of the image that implies the support also implies.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: The grandest of settings as an interesting that Putin is just a couple of paces ahead of Xi

arriving to that central carpet in the middle. And of course, it is Putin that needs what Xi has on offer. He would take everything if there were

weapons on offer, too.

But that, as we know, at the moment is not something that's being discussed publicly. But certainly improving ties in the economy are on offer. And of

course, that's what's going to help fund or help Putin fund the war in Ukraine. They're there to talk about a lot of things, business, the

economy, and all the things on President Putin's mind and Xi's mind.

That yes, they're setting up that hall St. George's Hall in the Kremlin Palace. That palace has over 700 rooms, and it has five great halls, St.

George's that they met in there is the largest. So really showcasing for the Chinese public who are going to see this as well, just what Russia has

to offer.

You know, that hole is so big, you can seat 800 people in there, and you can hold a banquet for 600 people in there. So there's a lot of symbolism

as you say, but it's a substance that Putin is going to want to get to in their meetings. We know that Xi Jinping is accompanied by his top Foreign

Policy Adviser Wang Yi, also by his Foreign Minister, as well.

Putin has touted the strength and business relationship between the two countries in his letter to the Chinese people $175 billion worth of trade

achieved in 2020 and aim of $200 billion worth of trade by 2024, which Putin says will perhaps be achieved this year, and it is an asset again.


It may not be weapons on offer here at least publicly but it is the money that Putin can get in business deals that will help fund the war. But Xi,

of course looking for bargains, as he always does, when it comes to Moscow when Putin needs a friend.

CHATTERLEY: Yes, there's leverage there. Its funny those images, as we were saying that the projection of power I think it influenced. But also

isolation, in many respects too those gentlemen in that enormous room, which I think goes to your point too, about who else is being messaged to?

At this moment, not just the relationship between these two, how far it extends, what it means if these two individuals ever refer to the conflict

in Ukraine as a war indeed but the messaging elsewhere in the world too.

ROBERTSON: Yes, two autocrats here who both say that they uphold the rule of international law, that they are good and upstanding citizens and

holders of the two of the five permanent security card seats of the U.N. Security Council. So they would have the world believe that their vision of

the future, a vision where autocracy is where, you know, President Xi has said that he thinks President Putin will get elected again next year.

This is already extending into the third decade of leadership for President Putin where President Xi is arriving just 11 days, 10 or 11 days after he

was given a third term as President of China. These are not men who believe in the value of democracy, but they say they uphold the values of

international law, which were built coming out pretty much of the Second World War on the values of democracy.

So this is a rebuff, it's a challenge, it's a visual statement to the West, to NATO, to the United States, to other members of the U.N. Security

Council, United States, U.K., France. This is a challenge to their world order and their view. And this is really, where China in particular sees

the importance of the relationship with Putin and sees a future of the world in its mold.

And is beginning to reach out diplomatically more and more around the world we've seen in the Gulf recently, being becoming broker between Saudi Arabia

and Iran. China's goals and limits are extensive and this is part of that picture.

CHATTERLEY: Yes, Xi's the term the Global Diplomat; it seems with some degree of potency. Nic Robertson, thank you so much for that. Now, its

talks between China and Russia resumed in Moscow, efforts are underway to organize a call between President Xi and Ukraine's President Zelenskyy,

that according to an Official in Kyiv.

Also taking place the Japanese Prime Minister has arrived in Ukraine for separate discussions. Ivan Watson joins us now from Kharkiv. Ivan, I think

the divisions in Northeast Asia and their views on this conflict dramatically highlighted by what's taking place across the two nations but

what more do we know about talks behind the scenes to organize that call between President Xi and President Zelenskyy?

IVAN WATSON, CNN INTERNATIONAL CORRESPONDENT: Right, well, since the Russian invasion of this country more than a year ago, there has not been

any direct communication with the Ukrainian President and the Chinese leader. Even though Beijing claims that it is neutral in this conflict,

even though Xi Jinping is currently embracing Vladimir Putin, the Russian President, and a suspected war criminal, according to the International

Criminal Court as we speak.

So there have been some contacts at lower levels. For example, the Ukrainian Foreign Minister spoke with his Chinese counterpart by phone last

week. But the Ukrainians were saying they're still kind of in discussions to try to arrange some kind of a direct communication between the Chinese

and Ukrainian leaders.

Which then raises the question, if China does want to promote peace and some kind of dialogue in this horrific war that is now underway? How is it

going to do that? If Xi Jinping has never had any communication with the leader of one of the two warring parties here, it does raise some serious


CHATTERLEY: Yes, Ivan Watson, thank you so much for that. Now, Washington remains skeptical of the meeting between Presidents Putin and Xi saying

there's little evidence that the talks could yield positive developments for Ukraine. Jeremy Diamond is that the White House, for us.

Jeremy, in terms of positive developments, the fear actually is that talk of a ceasefire, perhaps just buys time for Russia to consolidate their

position and push on. So what might on the surface appear to be a positive development certainly isn't at least from the perspective of the West?

JEREMY DIAMOND, CNN WHITE HOUSE CORRESPONDENT: Yes, that's exactly right. The notion of China reviving its proposals for a ceasefire in the war

between Russia and Ukraine it is certainly one of the things that U.S. Officials have really honed in on in the last 24 hours.

You have heard those raising serious concerns about that possibility because of what you just said that essentially, it would give Russia an

opportunity to re arm and regroup and then eventually restart the war on its own terms.


And Secretary of State Antony Blinken yesterday, in fact, compared it to a tactic, a Russian tactic that would effectively be supported by China even

if it were China that was to actually propose this ceasefire. U.S. Officials have also expressed concerns about the timing of China's visit,

noting that Xi Jinping is in Moscow.

Just days after the International Criminal Court issued an arrest warrant for Vladimir Putin over war crimes charges the Secretary of State saying

that that is essentially providing diplomatic cover to the Russians, for Russia to continue carrying out other war crimes.

Now, one other thing that U.S. Officials are closely watching out of these meetings between the Russian President and the Chinese President is this

possibility that U.S. Officials have said China is considering providing lethal weapons to Russia. So far, U.S. Officials have said that they have

seen no signs that that decision has been made by the Chinese but they have said that it is certainly something that the Chinese have not yet taken off

the table.

And so they are closely watching for these additional meetings today between the two leaders to see whether or not that is something that is

explored. In the meantime, the U.S. has provided additional weaponry to Ukraine. $350 million package approved just yesterday, that includes a lot

of the kinds of ammunition that the Ukrainians would need for their anticipated counter offensive this spring.

CHATTERLEY: And Jeremy, your point about timing, I think perfectly apt in light of perhaps other challenges. I'll call him that the United States

certainly isn't? But trying to play down the consequences and the impact of a potential visit by the President of Taiwan to the United States and

trying to send the message really, I think, to the Chinese that there's no precedent being set here and there's nothing really to see.

DIAMOND: Yes, that's exactly right. U.S. Officials have said that they have provided the Chinese with a history of previous Taiwanese Presidents

visiting the United States and traveling abroad as part of an effort there. And it's important to note that the U.S. is working on trying to improve

dialogue with the Chinese.

Yesterday, the National Security Council Spokesman John Kirby floated the possibility of the Treasury Secretary and the Commerce Secretary visiting

Beijing soon. And U.S. Officials have also said that they intend to have President Biden and President Xi get on the phone at some point that call

hasn't been scheduled yet.

But they do hope that that is something that can happen in the coming months and also looking to re-establish those military to military

communications that U.S. Officials say are so crucial to avoiding miscalculations, particularly in the Indo-Pacific.

CHATTERLEY: It's a diplomatic dance but I feel like there are plenty of stubbed toes already to say the least.

DIAMOND: As a good way to put it.

CHATTERLEY: Jeremy Diamond, thank you so much for that. OK, shares of Regional Bank, First Republic Bank have bounced back sharply after hitting

a fresh low during Monday's trading session. 11 banks, if you remember already rushed to the aid of the struggling bank.

And now there's a report. It is also looking for a further financial lifeline. Christine Romans joins us now. This is an interesting one, I was

looking at the data for the deposit outflows the suspected deposit outflows of this bank, and it dwarfs the amount of money that these big banks

effectively deposit dumped into First Republics and other talking about perhaps shoring up the capital position of the bank.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Yes, and it's, you know, the next steps for First Republic will be fascinating to watch. And

there will be next steps, the end of the support for First Republic was not just that 30 billion invested into the bank or deposited into the bank last

week by the other big banks. But we also know it's also sought a lifeline from JP Morgan, even before its most recent turmoil.

And, you know, we don't know who has tapped, you know that emergency lending facility or buy how much from each of these individual banks for

obvious reasons. But we know that there are efforts underway to shore up First Republic Bank bouncing this morning, bouncing off record lows, as it

starts to, you know, get advice from its bankers about what to do next.

And whether it can, you know, include another capital raise here. So, First Republic, the story hasn't been, the sentence has not been, you know,

written to the period at the end of that sentence quite yet there and the rest of the banking, Regional Bank stocks are bouncing back here today as


I feel as though there's just this sense of stabilization overall here. And one of the reasons this morning is because you've got the Treasury

Secretary who will be speaking in 45 minutes to a banking group in Washington and she has said that look, what we have done so far has been


Our intervention was necessary to protect the broader U.S. banking system. And similar actions could be warranted if smaller institutions suffer

deposit runs that pose the risk of contagion.


And I think investors wanted to hear that explicitly that if there is another problem at a little bank that we don't see right now that the Fed

will, the Treasury will be there for those depositors again you know a lot of discussion about what is exactly systemically important.

There are small banks that aren't. But if you have this fear factor in the psychology right now. Then do they become a little more critical then maybe

they would have been a few weeks ago? We'll see.

CHATTERLEY: Yes, it goes back to the conversation we've been having now it seems daily, which is, we seem to be in a situation where and you've said

it there with what the Treasury Secretary is saying that there's as close as they can get to an explicit guarantee without making it explicit that if

a bank now gets into trouble, those uninsured depositors are going to be protected. The question is this going to be enough?

ROMANS: And I think there's also a question that legally they can do that what authorities do they have? Is this something that is Congress needs to

address, you know, what exactly? I think are the legal authorities and the powers that the FDIC and the Treasury have in a situation like this. And so

I think all of that is sort of under consideration here.

CHATTERLEY: Words at the moment, rather than Congress acting and the hope that's enough to bolster confidence. Yes, Christine, thank you so much for

that. All right, straight ahead. Prudent to pause or will the Fed push on with rate rises. We'll discuss with the Former New York Fed President Bill

Dudley, after this.


CHATTERLEY: Welcome back to FIRST MOVE, it's a high stakes balancing act for the Federal Reserve as policymakers weigh their next move in the battle

to tame inflation. There are a few options on the table will they hold back for more rate rises, because of the stress in the banking sector?

Will they follow the European Central Bank's footsteps and raise rates by half a percentage point or will they go with a more modest quarter point

hike? Among other things decision makers at the Fed are also watching how regional American banks are doing amid troubles with First Republic Bank

and beyond much to discuss.

Joining us now is Bill Dudley who served as President of the New York Federal Reserve from 2009 to 2018. He is also on the Board of Directors at

UBS. I will mention that because that means we don't talk about that. Bill, the good news is and welcome to the show. We have plenty of other things to


Let's cut to the chase here. Just your assessment of what we're seeing across the financial sector in the United States and whether you believe

ultimately, Congress and policy makers can get away without providing an explicit backstop to uninsured deposits.


BILL DUDLEY, FORMER PRESIDENT OF THE NEW YORK FEDERAL RESERVE: Well, that remains to be seen, but this is very different than the great financial

crisis. This is really about banks with large bases of uninsured deposits who've taken on interest rate risk. It's very well-known, well defined

during the great financial crisis that was much more about, you know, the underlying housing boom and bust.

And that putting a lot of stress on the banking system and that was exacerbated by the fact that it was very hard to value, a lot of the

complex assets that banks and other financial intermediaries held. I think this situation is much more manageable than the great financial crisis, and

I think it's going to have much less damage to the U.S. economy.

But the Fed is in a bit of a bind. On one hand, they should keep typing because inflation is still too high, labor markets too tight. On the other

hand, they want to basically make sure that they don't do anything that exacerbates the stress in the banking system and so that argues for


So I think its very close call what they're going to do tomorrow. And there's not really a right solution, they could pause and signal that

further rate hikes are likely once this situation gets stabilized, or they can hike 25 basis points, and make it very clear that they're very focused

on what's going on in the banking system. Either option, that's completely reasonable one.

CHATTERLEY: I was about to say, I'll just on the surface tightening into a sort of financial stability problem, let's calling it that created by

tightening. Sort of sounds problematic, at least on the surface but what would you be recommending just a pause, perhaps?

DUDLEY: Pausing is also a little problematic, because it's sort of scary, like what is the Fed know, that we don't know they're pausing, they must be

really scared about what's going on in the financial system? So I don't think there's a right answer. I mean, I don't really think it matters as

much as people think about what they do --.

I think what matters is can they stabilize the banking system. So they can free up their ability to tackle inflation, I mean, at the end of the day,

they still have an inflation problem. So the right thing to do is broaden out your liquidity support, have a firm backstop for the banking system.

Banking system settles down, that allows you then to go back to taming inflation.

CHATTERLEY: I mean, part of the calculation that they have to make here is how much damage has been, is being, will be done by what we've seen,

whether that's in lending behavior, particularly for some of these regional banks or consumer behavior too? I don't know, it's sort of finger in the


Can you predict at this moment how significant or insignificant? I'll give you that option too. You think the growth impact will be from this, because

that's critical too.

DUDLEY: Let's imagine that this whole thing comes down over the next couple of weeks. If that's the case, that's certainly what the Feds goal is. If

that's the case, I think the impact on the economy is going to be pretty modest. The banking system counts for a relatively small share of total

financial intermediation activity and United States.

Unlike other countries, where the banking system is more important, and these few Regional Banks that are really under stress only represent a few

percentage points of the U.S. banking system. And the problem is not a credit problem. It's not a question of the banks having bad credit.

But the problem is that they have lots of uninsured depositors and they have losses on their long asset holding. So I think this is manageable if

the Fed can just calm things down.

CHATTERLEY: How high do you think the Federal Reserve if that case that you're providing there that a couple of weeks, and this all comes down? How

high do you think interest rates could get because going back two weeks, we were sort of complaining in a way that the U.S. economy have been too

resilient to rate hikes, and that terminal rates could be 6 percent? Do we get back there?

DUDLEY: Well, I mean, obviously, given this banking turmoil is going to kind of have some impact on growth. So you certainly would think that the

peak if you thought that peak was 6 percent, earlier, maybe now the peak is 5.5. I do think where I would disagree where the markets are right now

pricing and all these interest rate reductions in the second half of the year, and in 2024.

I don't really see the basis for the Fed to be cutting interest rates. I think the economy is still very strong labor market, still very tight. And

as long as this banking crisis is sort of contained, then I think the impact on the economy is going to be relatively minor.

We're going to see growth in the first quarter of around 2.5 percent. This is very different than the great financial crisis. We went into recession

during the great financial crisis. People forget this December 2007, many, many months before Lehman weakened.

CHATTERLEY: Yes, I mean, and the feeling there was a question of what lies beneath? There was a complete lack of trust between banks, I think in the

system, there was a belief that we'd get through it somehow and so we were far slower, particularly given what we've seen in the last week.

I think for comparison, too, so the reaction speed is far quicker in this case too. And Bill, if there are what lies beneath? I mean, you could

always make the point that we don't know. What we don't know --?


DUDLEY: I think the interest rate risks that banks have taken, you know, people banks that have stretch for yield by buying more long dated

treasuries in agency mortgage backed securities, that's what happened to Silicon Valley Bank, that's really well known and that's very evident. I

think the problem where we don't have very good visibility is on commercial lending in for office buildings and things like that.

I mean, if I had to worry about one particular sector of the lending, I would be worried about people about banks that are have a big commercial

office building exposure, because that's the area that was really is really going to be upended by what's happened during the COVID pandemic? I mean,

people are working more from home, office building spaces now abundant, and that's going to have some consequences for valuation of commercial office


CHATTERLEY: OK, so that's one area to watch. I think the other thing, and it's, sort of hindsight, its perfect sight. But you were still having this

battle and we had it with Silicon Valley Bank, where there are facilities at the Federal Reserve where these banks can access liquidity.

And I just wonder whether there's a way to sort of flip that, and you and I've had a discussion separately and are now and I want you to say on air,

because I think it's important where you sort of make, rather than individuals have insurance or uninsured deposits. You actually make the

banks buy insurance, or invest in insurance. So they can - access that liquidity.

DUDLEY: One thing you would like to do is reassure people on ex-ante basis before the stress hits, rather than ex-post after everything, you know, a

break starts to break apart, because obviously, you know, once Silicon Valley Bank went down, that created a lot more anxiety about a bunch of

other banks, far better to have, you know, a very credible liquidity backstop in place.

It's available on ex-ante basis that Silicon Valley can access. So they don't fail in the first place. If they don't fail, then the contagion, you

know, to other banks is, you know, minimal, and you can get life can go on. One thing you could potentially do is basically force banks to buy

liquidity in short.

Explicit liquidity insurance from the Fed, that would avoid the moral hazard problem of giving them something for free, they had to pay for it.

And once they bought it, then everyone would know that they have the ability to go to bed and obtain funding, according to what they purchased.

I mean, one of the problems the Fed has is the discount window, which is the Feds wonder of last resort facility is stigmatized. Banks don't like to

use it, because they view that this is something that makes them look weak. So I think that the challenge here is to build a facility that people think

is perfectly reasonable to use, because I paid for it.

CHATTERLEY: Yes, and then you don't have the moral hazard problem of this blanket coverage for uninsured deposits, which could incentivize bad

behavior at the banks and moral hazard, the banks already have it. So they're less likely to be tested by deposit withdrawals. So to your point,

this sort of solves the problem before it's happened. Perhaps I'm going to ask--

DUDLEY: It's also fairer.

CHATTERLEY: Yes, it's also fairer.

DUDLEY: I mean, right now, these decisions are made on an expert basis on a case by case basis. So why have one banks insured depositors protected, but

not in others? That doesn't seem very fair?

CHATTERLEY: I couldn't agree more. I'm going to circle back to the first question I asked you, but ask it in a different way to see if you give me a

different answer. And that is, what would it take? Do you think to sort of effectively bank Congress and politician's heads together to decide that?

OK, even if it's just for a short period of time, six months, one year, that we need a blanket, sort of protection, even for uninsured deposits?

What does it take do you think in terms of instability?

DUDLEY: I think you need quite a bit more than what we've had to date. I mean, you know, you could argue that protecting all deposits, is has some,

you know, better attributes. One is everyone knows you're protected, so you don't have to run in the first place. Number two, it's fair, you're not

discriminating against one bank versus another.

But if you truly have uninsured deposits, then you need much tougher regulation, because if any bank can obtain an unlimited amount of uninsured

deposits, that are now insured, banks can get up to mischief. You know, we saw that during the S&L crisis. You know, S&L is basically started making

big bets.

So if you're going to do that, you need to put limits on how fast banks can grow or you need to put limits on banks concentration, you need to pay a

lot more attention to what bankers are doing, if they have unlimited access to deposits.

CHATTERLEY: Yes, it's tough, isn't it? You tried to solve one problem and you went --.

DUDLEY: There is no free lunch?

CHATTERLEY: No should there be? Yes, great to chat to you. Sir, thank you so much for your wisdom. Bill Dudley, there, Former President of the New

York Federal Reserve always a pleasure, thank you. All right, coming up here on FIRST MOVE, flexing diplomatic muscle what Xi Jinping's visit to

Moscow really means for the war in Ukraine. That's next.



CHATTERLEY: Welcome back to FIRST MOVE! In an action packed day already filled with important honesty policy and superpower meetings. The wait for

possible Trump indictment proceedings and financial market bank stabilization greetings fingers crossed on Wall Street for now calmer


U.S. stock that up for a second day after Monday's across the board rise, all this amid hopes that big banks will do more to help stabilize the

Regional Bank First Republic. We've also had Treasury Secretary Yellen she's going to be saying later on today in a speech that the U.S. will do

more if needed to guarantee bank deposits to it's as close as you get.

I think to an implicit explicit promise First Republic outperforming all the regional banks in early trade today after losing almost half of its

value. On Monday the company shares down some 90 percent nine zero already this year amid concerns of depositor flight following the collapse of the

Silicon Valley Bank.

Now back to our top story and a powerful show of support. Chinese Leader Xi Jinping meeting with Russian President Vladimir Putin in Moscow. This is

the second day of his three day state visit. It follows four hours of talks on Monday, between the two leaders Putin said Russia carefully studied

China's peace proposal for the conflict in Ukraine.

It's only being called a peace proposal, of course by the Chinese, not the rest of the world. Michael Hirson joins us now. He's the Head of China

Research at 22 V Research. Michael fantastic to have you with us! High visibility it seems but you're not expecting any real and concrete outcomes

from this, explain?

MICHAEL HIRSON, HEAD OF CHINA RESEARCH, 22 V RESEARCH: Well, I think the reason we're not going to see any concrete outcomes is because Xi Jinping's

goal here is to present China as being a constructive agent in this conflict but stopping well short of any expectations that China is going to

have broker a deal or really to pressure Russia.


Which is essentially what it would take, I think to really de-escalate the conflict. So we're seeing something of a holding pattern here, which I

think is not really going to make a difference at certainly in the short term in terms of how this conflict is playing out.

CHATTERLEY: How much of this is also about Xi Jinping and Beijing showing that it won't be in some way cowed or influenced by U.S. EU and UK demands,

whether that's tackling Russia with regards to the war in Ukraine or anything else?

HIRSON: I think there's a significant part of that. Xi Jinping's message to his domestic audience is that the country in the party need to rally around

him in order to fight off Western containment of China. And he used those words directly against the U.S. at the National People's Congress earlier

this month.

And of course, that is part of Beijing's narrative about this conflict in Russia; it's that it is being fomented by the West in a way that makes

Russia insecure. So there's certainly an aspect of this standing up to the U.S. that helps with China's relationship with Russia, but also as an

important message to the domestic audience as well.

CHATTERLEY: The suggestion is, and they've said it that Putin has studied the 12 point plan that China provided. It sort of confuses me, because the

first point on that was that the nations respect each other's sovereignty.

So one could argue the plan itself immediately falls down at the first point if Russia remains in Ukraine in this way. But you also think it's

very unlikely that she crosses the de facto red line that NATO is presented in the provision of weapons to Russia; unless his future depends on it,

just give us that calibration and your thinking on this?

HIRSON: Sure. So China's fundamental interest, of course, always is going to be domestic, domestic stability. And I don't think it's going to take

risks unnecessarily, that would have any kind of threat to domestic stability, moving over that red line would be a potential risk, it would

mean potentially quite aggressive sanctions against China from the U.S. and the EU.

However, number two in that hierarchy of how Beijing is thinking about this conflict is Russia stability. I think the real bottom line after domestic

stability is that Moscow can't fail in this conflict from Beijing's perspective, that doesn't mean that Putin needs to win.

But he can't fail in a way that would be calamitous for him, because the risk for China, if he does fail, is potential instability in Russia, and

also just the sense that China has failed to some extent, as a partner for Russia.

So I think the bottom line is at this point I don't think we're seeing a sense of urgency from China, which Putin is so close to failing in this

conflict, that it would lead them to take risks for domestic stability. So I think it is that finely calibrated line of providing economic and

diplomatic support to Russia, but not crossing that red line in terms of lethal assistance.

CHATTERLEY: What do you expect in terms of talk, if anything on a ceasefire? If you bear all of that in mind that you just said this sort of

calibration between not wanting to lose or risk the loss of ever powerful ally, particularly given the deterioration in relations with the West?

The United States is afraid that talk of a ceasefire is simply that a message to other nations that perhaps would like to see into this and a

sympathetic to the idea of an end. But really, it's just buying what they're calling political cover for Russia to perhaps consolidate its

position and then press on?

HIRSON: I think that's exactly right. China would like to see a ceasefire that's part of their proposal, their argument is, and you can't have

negotiations unless you first have the conditions to de-escalate. Of course, the U.S. and the Europeans view that as an argument that just

serves Russia's interests by kind of entrenching Russia's gains in this conflict.

So I think in practical terms, it's going to be a non-starter. And that's I think, one reason why this proposal, and we'll have to see what China comes

out with coming out of this meeting is unlikely to go very far.

CHATTERLEY: Do you think this situation can be improved, Michael? And I'm not talking about the Korean War now. I'm talking about the deterioration

in tone in relationship between the United States and China.

Because one could argue that mistakes, missteps, cultural misunderstandings have taken place on both sides. Is there a way around this? Or is it a case

of sort of biding time until the end of this administration? We'll see what happens after that?

HIRSON: Well, I think you're absolutely right. There is just a series of misunderstandings or miscalculations are really just the two sides

interacting with each other in a very, I think you could say a vicious cycle. I don't see any signs that this is headed for improvement.

I think the Ukraine conflict has worsened the dynamic between the two countries. And I think U.S. China tensions have worsened the ability to

cooperate over Ukraine. I think the best we can hope for is to try to at least stabilize and not have a more serious crisis.


And I think one thing we should be watching for is do President Biden and President Xi speaks now that Xi has made his trip to Russia, and now that

the National People's Congress is over? I hope we see that because I think it would be a sign that at least the channels are there to avoid, you know,

worse spillovers from the state of tensions right now.

CHATTERLEY: I would just want to show our viewers the imagery, again, from earlier with the sort of walk between the two Presidents and that meeting

moment in the center that pomp, that power, in many ways, the isolation too.

How important do you think this meeting is, and what comes from this meeting, at least in terms of diplomacy for the Europeans? I just -

Emmanuel Macron come to mind and the protests that we've seen in Paris as a result of the decisions he took to make changes with the age of retirement.

He's burned political capital domestically. I just wonder whether there's anything that can take place here that perhaps in some way softens the

minds of some of the Europeans?

HIRSON: I think that is part of Xi Jinping's calculation here. I think, you know, European leaders generally view this trip with a lot of cynicism.

They're very frustrated with China. They don't believe Beijing fully understands how serious this conflict is for Europe.

But from Beijing's perspective, they're seeing some of the strains in Europe right now, socially, economically. And I think part of this trip is

to say, look, China's not going to deliver a peace agreement. But we are a part of this dynamic. We're a part of an eventual solution.

And the reason why that's helpful to China is that they want to prevent Europe from a strong relationship with the U.S. in countering China. And so

to show that China might be a constructive actor, at some point down the road, even on Ukraine, is a way of dissuading European Leaders from taking

very aggressive actions towards China.

For example, on Taiwan or technology controls, or other areas in which Washington is trying to strengthen the U.S. EU relationship, so there is

clearly an element here that Beijing is targeting, you know, at Europe.

CHATTERLEY: Once again, we're showing these pictures and it's quite fascinating how diminutive I'll use that word President Putin looks next to

President Xi. President Xi seemed far more relaxed than President Putin, which I guess one could imagine, given the relative size of the economies

that's situation that President Putin finds him in the importance I think, of the show of support from President Xi.

Michael, President Xi not unaware of the leverage he has globally over Russia at this moment. Could there be a point where actually, President

Putin no longer is useful to him? In fact, he becomes simply an irritation.

HIRSON: I think it's unlikely because of how important the China Russia relationship is. The two countries obviously they share of border they

share very important economic relationship and security relationship.

So if Putin were to fail, for example, it would be deeply, deeply disturbing for China. So I think that, you know, Beijing some experts in

Beijing, some policy advisors have a bit of buyer's remorse here in terms of how China has signaled its support for Russia in this conflict.

But I think from Xi Jinping's perspective, the relationship with Putin is going to stay quite important. And I don't think he's going to take any

real risks with that it will continue to be a very important relationship for him.

CHATTERLEY: Yes, it's interesting. I was tried to separate Putin and Russia there. But you didn't. And I think that's perhaps quite right. Michael,

thank you so much for that! Michael Hirson there Head of China Research, 22 V Research great to have you with us!

OK, coming up after the break, time for Trump watch. The Former President says he expects to be indicted but when that could happen remains unclear.

We have the latest next.



CHATTERLEY: Welcome back to FIRST MOVE! Police barricades are going up around Manhattan District Court in New York and in Washington too ahead of

a possible indictment of Former President Donald Trump.

Law enforcement officials say Tuesday is a "High Alert Day" but currently there's no credible threat. The Former President is bracing for charges of

falsifying business records. It's related to hush money payments made by a former fixer Michael Cohen, to adult film star Stormy Daniels.

Paula Reid is on the case for us. Paula, great to have you with us! I have a few questions. How likely is an indictment in the first place? How likely

an indictment is today and even if he is indicted what happens then?

PAULA REID, CNN SENIOR LEGAL AFFAIRS CORRESPONDENT: So at this point, we don't know the strength of the evidence that has gone before this grand

jury. But we do know the prosecutors have made some moves that strongly suggest they are moving to indict Former President Trump including offering

him an invitation to come and testify before the grand jury.

They also granted a defense request to put a witness in front of the grand jury. A grand jury that's prosecutors control that show but they granted

this defense request to put a witness in front of the grand jurors to attack Michael Cohen's credibility.

Again, these are things that are only typically done when you are planning to indict a defendant. We also don't know right now, though, is if the

grand jury is going to hear from any more witnesses, and when if ever, they will vote to indict.

If the Former President is indicted, the way that process works is that the indictment is filed under seal defense attorneys are notified that there

has been an indictment but not necessarily the charges that have been filed. And then you negotiate an initial appearance in a self-surrender.

I've spoken to sources on the Former President's legal team who told me he would surrender if he is charged. And that at this point, they don't expect

that any sort of initial appearance would happen until at least next week. So right now we're waiting. And we're watching. The big question is the

grand jury done? And we just don't know.

CHATTERLEY: Yes, I mean, there's so many unknowns here that the reason why we've been talking about this, of course, just to remind our viewers is

because President Trump himself suggested that he was set to be indicted today.

And that sort of whipped up a storm of all kinds around this. Just to be clear, let's assume he is indicted and as you said, it might take around a

week for that to be organized and then for him to surrender. What does that process involve?

REID: Is really unprecedented here, right because we're dealing with the former leader of the free world. This is someone who has Secret Service

protection and the courthouse that we're talking about, even when they have other high profile defendants.

I mean, this is a pretty chaotic, building security concerns there are just going to be enormous. We know that law enforcement officials have been

meeting this week to talk about this possible scenario. And it's just unclear how they would treat him because even though procedurally he's

supposed to be treated the same as all the other defendants when it comes to just the security bringing him into that building it's going to have to

be something different.


I mean, he just has protections that other people don't have. But I'm told that he wants to appear in person. He does not want to even attempt to

request a remote hearing or anything like that. So it'd be really interesting. As you noted, he had predicted that he would be arrested today

I believe.

But his own team came out and said he had no evidence to back that up. And he was using that speculation about an arrest to call for his supporters to

protest. And he was also fundraising on his social media platform as well. So he believes this will help him politically.

CHATTERLEY: Yes, this has been a show about visuals. And this story certainly is first and foremost, I think in that regard, Paula Reid thank

you so much! OK, coming up on FIRST MOVE a powerful performance at one of London's most storied venues, an emotional concert dedicated to Ukraine,



CHATTERLEY: Welcome back to FIRST MOVE! That group of Ukrainian women has a powerful note for their country and the world while their loved ones enjoy

the horrors of war. They're starting new lives in the UK and beginning with a musical message of support a performance at London's Royal Opera House.

Isa Soares has their story.


ISA SOARES, CNN CORRESPONDENT (voice over): Why my land they sing each word a haunting loss that fills the room with pain and longing for this group of

around 130 Ukrainians mostly amateur singers. This performance at the Royal Opera House in London is deeply personal.

It has taken over two months of rehearsals and hours of fine tuning to get to this point. For members like Olga who was forced to flee from my

hometown of Irpin after Russia's invasion this is an opportunity to be part of a new community in a new country.

OLGA, UKRAINIAN REFUGEE: It's huge support for me. It's huge, huge support and feeling that I'm not alone. And I united with people with a different

people we are together.

SOARES (voice over): These songs now offering a connection to home and a reminder of the many lives lost. More than 360 Ukrainians applied to be

part of this project for what originally supposed to be just 45 spaces.

JILLIAN BARKER, DIRECTOR OF LEARNING AND PARTICIPATION, ROYAL OPERA HOUSE: I think it's that sort of sense of coming together as only music making can

is bringing out a lot of emotion.

SOARES (voice over): Those selected to perform were from all age groups but mostly women men are more likely to stay behind and fight on the front

lines. Natalia's husband is one of them. She tells me he's currently fighting in Bakhmut one of Ukraine's fiercest battlegrounds.



SOARES (voice over): Words of love that lead Natalia shaking and longing to be home.


SOARES (voice over): Isa Soares CNN, London.


CHATTERLEY: Singing the show out. That's it for us today. Thank you for joining us. "CONNECT THE WORLD" is up next. I'll see you tomorrow.